|
Managing For Money
Organizing for Growth
A model for success you won’t want to be without.
by Steven C. Bursten
After
some 20 years in the industry—10 in franchising—I had
one of those Eureka! moments like Archimedes when he sat in a tub
of water (discovering volume and displacement) and reportedly ran
down the street naked shouting he had discovered the answer. My
“Eureka!” moment was developing an organizational chart
for the window coverings business.
If you are trying to grow, this may be your Eureka! moment, too.
Why so momentous? That’s what our story is about this month.
COMPLICATED VS. COMPLEX
My challenge in franchising was to introduce new business owners
to window coverings—to start them up and train them to grow.
It was hard (still is!). As we all know, a window coverings business
is complicated. Try to teach it to a new person. This crazy business
is like a huge blob with lots of pieces, hard to sort out. The trick
is to break it into bite-size chunks. One management consultant
said, “A business is complicated if you don’t know what
the components are. If you do, it is merely complex.”
When you break our wonderful business into components the complexity
is manageable. Any experienced window coverings operator can look
at the adjacent organization chart and with a little coaching know
exactly what is needed for his or her own operation. It’s
a reference for management, a blueprint for growth.
If you want to explain your business to your employees, it is easy
to visualize their jobs. The chart tells the role of each person.
Like power steering, once you experience it, you never want to be
without it.
ARTISTIC DEPTH
As with any great work of art, the first introduction may leave
one underwhelmed. The words and boxes seem obvious, but its subtle
power blossoms when put into use.
As you grasp its meaning, this innocent graphic can become your
touchstone reference, your fountain of knowledge, to return to again
and again to solve business problems and manage for growth.
THINK OF DEPARTMENTS
The first thing the model tells us is how to define the “departments”
of a window coverings business. Each, except the owner’s department,
can be assigned to a responsible person. The benefit is you know
exactly the job of the next person you want to hire.
As the owner, you wear all the hats of every department until you
hire, train and assign accountability to others. Now you know why
you have that feeling of being overwhelmed so many years. When you
break the pieces down, you can see all the things you have been
doing . . . and many that you should be doing.
Another message relates to pricing. If one person is the department
head for every function, then that one person can sell cheaper than
the person who pays someone else to manage a department. The first
rule of pricing is that any business with employees is going to
have to charge more—and justify it to the customer—if
she or he wants to grow with added staff.
OUTLINE
Here is a brief outline for what could be a month-long course of
study. But it will start you on the path to defining, clarifying,
crystallizing and, ultimately, assigning departmental responsibilities
to others.
• Owner’s Role—This is the one
job you cannot delegate. Only the owner can have the vision, goals
and plans for the business. Only the owner can set pricing, hire
employees, approve expenses, set a budget and be accountable for
profitability.
• Client Development—This is any expense
or activity that causes potential customers to call for an appointment.
For many, it will be an eye-opener to see a “department”
that is roughly equal to the sales function—or even to the
production of window coverings. In other words, this is a function
that could have one person full-time or an investment of tens of
thousands per year “only” to get appointments.
• In-home Sales—This department requires
one or (many) more persons to go to customers’ homes to present
ideas and products to close a sale. The professional performing
this function will succeed by a combination of design skills, product
knowledge and sales skills. Think about all three of these skills;
each can be a lifetime, full-time requirement for any professional
to acquire.
• Operations—This department is responsible
for everything after the order is written with a customer. It includes
ordering from vendors, contracting for drapery making, purchasing
products from suppliers, contracting or hiring installers and everything
else required to take a customer order from written specifications
to a final installed product the customer will pay for.
• Administration—This department is
responsible for bookkeeping, accounting, legal compliance and anything
else necessary to fulfill good record keeping and state and federal
laws and tax filings.
FRONT SIDE AND BACK SIDE OF BUSINESS
One of the most profound insights that flows from this chart is
that money is only created by activities and investments in the
first two departments—the front side of the business. The
second two departments are cost centers that sap money, but do not
create it—the back side of the business.
This explains why some business owners without any employees except
themselves struggle to sell $50,000 per year, while other owners
can sell up to $400,000 a year.
CONCLUSION
Every business owner chooses the window coverings and decorating
profession for his or her own reasons. If a person enjoys sewing
as a craft, then let us respect that person for the craftsperson
he is. The industry needs every window designer and drapery sewer
who takes pride in her talent. When we match a skilled craftsperson
with a dedicated salesperson the result is a wonderful business
where each enjoys a fulfilling career.
We must never judge any business owner by his sales level. The important
issue is whether the owner consciously chooses the type of business
he enjoys and then achieves the profit potential inherent in that
choice.
The value of this powerful chart is to help every person in window
coverings from salesperson to installer to workroom sewer to understand
the valuable part each plays in the whole—and to provide the
business owner a blueprint to grow correctly.
 Steven
C. Bursten is the retired founder of Decorating Den Interiors and
author of a how-to book on new business start up, Bootstrap Entrepreneur.
He is president of custEmers.com,
specializing in affordable Internet marketing tools along with tried
and true techniques. Bursten welcomes your questions about marketing,
sales and customer relationships. Request his new report for businesses
that sell $1 million a year—or want to: “Solutions for
Million Dollar Managers” via e-mail: million.dwc@custEmers.com.
|
